A new pay transparency law goes into effect in New York City on Tuesday, requiring workplaces with four or more employees to list salary ranges on job postings. It is similar to recent laws that went into effect in Colorado, Washington and California.
The goal of these laws is to close pay disparities among workers, including among women, older workers and racial groups, which data has shown are frequently underpaid relative to male, younger or white peers. Some research suggests that the laws can reduce the divides. Other research, though, has shown that transparency laws can lead to lower wages for individual workers.
The New York law is significant because of the sheer size of the area. When Colorado passed its pay transparency law in January 2021, a noticeable number of large, remote companies stopped recruiting in the state. But to be competitive in the hiring market, remote companies can’t opt out of posting jobs in a city of 8.5 million people, potentially setting the stage for more companies nationwide to post salary ranges regardless of laws in their state.
Experts say this could be one of the biggest falling dominoes of pay transparency laws passed across the country.
Salary disclosure laws began to pass in states before the onset of the covid-19 pandemic, but since then, workers have commanded more power in the marketplace, seeing wages rise as employers scrambled to fill jobs amid shortages. But as the economic outlook dampens and employers make decisions amid rising inflation and a possible recession, it’s less clear how much power workers will gain from the new laws.